Working Papers and Chapters and Reporter Articles

When forming expectations, households may be influenced by the possibility that the information they receive is biased. In this paper, we study how individuals learn from potentially-biased statistics using data from both a natural and a survey-based experiment obtained during a period of government manipulation of inflation statistics in Argentina (2006-2015). This period is interesting because of the attention to inflation information and the availability of both official and unofficial statistics. Our evidence suggests that rather than ignoring biased statistics or navively taking them at face value, households react in a sophisticated way, as predicted by a Bayesian learning model, effectively de-biasing the official data to extract all its useful content. We also find evidence of an a...

Many federal and local governments rely on shaming penalties to achieve policy goals, but little is known about whether these penalties work as intended. Shaming penalties may be ineffective or may backfire by crowding-out intrinsic motivation. In this paper, we measure the effects of shaming penalties in the collection of tax delinquencies. We sent letters to 34,344 tax delinquents who owed half a billion dollars in three U.S. states. We randomized some of the information contained in the letter to vary the salience of financial and shaming penalties. We then measure how the salience of these penalties affected subsequent re-payment rates. We find that increasing the salience of financial and shaming penalties reduces tax delinquency. The effects of shaming penalties are only significant ...

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in lower-inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is made readily available, individuals still place a significant weight on less accurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the im...

In this paper we present the results from a "corruption game" (a dictator game modified so that the second player can accept a side payment that reduces the overall size of the pie). Dictators (silently) treated to have the possibility of taking a larger proportion of the recipient's tokens, take more of them. They were also more likely to report believing that the recipient would accept a low price in exchange for a side payment; and selected larger numbers as their best guess of the likely proportion of recipients acting "unfairly". The results favor the hypothesis that people avoid altruistic actions by distorting beliefs about others.